President Obama Signs Flood Insurance Bill

President Obama signed the Homeowner Flood Insurance Affordability Act of 2014, H.R. 3370, March 21. It limits increases on flood insurance premiums and restores grandfathering.

The U.S. Senate passed the Homeowner Flood Insurance Affordability Act of 2014 (H.R. 3370) March 13 by a vote of 72–22. The same bill passed the U.S. House of Representatives on March 4, 2014 by a vote of 306–91. President Obama signed the bill March 21.

The measure is in response to the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12), signed into law in July of 2012, which aimed to make FEMA’s National Flood Insurance Program (NFIP) more financially stable by reflecting true flood risks in communities. However, BW-12, drastically increased premium rates for existing businesses and homeowners in a number of the nation’s counties — both coastal and inland — as subsidized premium rates began phasing out.

H.R. 3370 repeals Section 207 of BW-12, allowing the grandfathering of policies to continue. Additionally, the bill would limit the average annual rate increase to 15 percent for any single risk classification (i.e. grouping of policies); place a per-property cap of 18 percent. H.R. 3370 also recommends, but does not require, that FEMA limit the number of policies with premiums that exceed 1 percent of the total coverage of the policy (e.g. $2,000 on a policy coverage of $200,000). For policies that exceed the 1 percent threshold, FEMA is to report such exceptions to relevant congressional committees.

The bill also institutes a new surcharge of $25 for primary residences and $250 for secondary residences and businesses, which are to be deposited in the NFIP reserve fund.

NACo supported H.R. 3370 and worked with House and Senate leadership on its passage.